CONTACT:
Investor
Contact:
Jason VanWees
(310) 893-1642 |
Media
Contact:
Robyn McGowan
(310) 893-1640 |
LOS ANGELES,
California -- July 28, 2005
--Teledyne Technologies Incorporated (NYSE:TDY):
- Revenues of
$303.3 million increased 27.0% compared to last year
- Year-over-year
organic revenue growth of 14.4%
- Earnings per
share of $0.47 increased 56.7% compared to last year
- Raising 2005
earnings per share outlook
Teledyne Technologies
today reported second quarter 2005 sales of $303.3 million, compared
with sales of $238.9 million for the same period of 2004. Net income
for the second quarter of 2005 was $16.1 million ($0.47 per diluted
share), compared with net income of $9.9 million ($0.30 per diluted
share) in the second quarter of 2004.
"This was
an outstanding quarter for Teledyne, as we again achieved record sales
and net income. We also generated double-digit organic revenue growth
for the fourth consecutive quarter," said Robert Mehrabian, chairman,
president and chief executive officer. "In addition to excellent
revenue growth, operating margins for the overall company and our Electronics
and Communications segment remained near record levels. Furthermore,
given our strong cash flow, net debt decreased slightly during the second
quarter, despite the acquisition of Cougar Components on June 30."
Review of Operations
Electronics
and Communications
The Electronics
and Communications segment's second quarter 2005 sales were $176.5 million,
compared with second quarter 2004 sales of $134.6 million. Second quarter
2005 operating profit was $20.8 million, compared with operating profit
of $14.2 million in the second quarter of 2004.
Second quarter
2005 sales, compared with the same period of 2004, reflected revenue
growth in defense electronic products, electronic instruments, electronic
manufacturing services, relay products and telecommunication subsystems.
The revenue growth in defense electronic products was driven by sales
of traveling wave tubes, the acquisition of Reynolds Industries, Incorporated
in July 2004 and the acquisition of the defense electronics business
of Celeritek, Inc. in October 2004. Electronic instruments revenue was
favorably impacted by the acquisition of Isco, Inc. in June 2004, partially
offset by reduced sales of geophysical sensors for the energy exploration
market. Electronic manufacturing services had increases in government,
commercial and medical sales while revenue growth in relay products
was driven by increased sales to the aviation and test and measurement
equipment markets. The increase in revenue from acquisitions for the
second quarter of 2005, compared with the same period of 2004, was $30.4
million. Segment operating profit was favorably impacted by acquisitions,
organic sales growth and by lower pension expense, partially offset
by higher LIFO reserves. Pension expense, in accordance with the pension
accounting requirements of SFAS No. 87, was $1.0 million in the second
quarter of 2005, compared with $1.7 million in the second quarter of
2004. Pension expense allocated to contracts pursuant to U.S. Government
Cost Accounting Standards (CAS) was $0.4 million in the second quarter
of 2005, compared with no allocation in the second quarter of 2004.
Systems Engineering
Solutions
The Systems Engineering
Solutions segment's second quarter 2005 sales were $66.2 million, compared
with second quarter 2004 sales of $57.6 million. Second quarter 2005
operating profit was $7.0 million, compared with operating profit of
$7.1 million in the second quarter of 2004.
Second quarter
2005 sales, compared with the same period of 2004, reflected revenue
growth in core defense, environmental and aerospace programs. The lower
operating profit in the second quarter of 2005, compared with the same
period of 2004, was primarily the result of increased subcontract work
in our systems engineering and technical assistance (SETA) contracts
which carry lower profit margins, partially offset by increased sales
on other contracts. Segment operating profit included pension expense
under SFAS No. 87 of $1.6 million in the second quarter of 2005, compared
with no pension expense in the second quarter of 2004. Pension expense
allocated to contracts pursuant to CAS was $1.8 million in the second
quarter of 2005, compared with no allocation in the second quarter of
2004.
Aerospace Engines
and Components
The Aerospace Engines
and Components segment's second quarter 2005 sales were $53.0 million,
compared with second quarter 2004 sales of $41.3 million. The second
quarter 2005 operating profit was $3.4 million, compared with an operating
loss of $0.9 million in the second quarter of 2004.
Second quarter
2005 sales, compared with the same period of 2004, reflected revenue
growth in OEM piston engines, partially offset by lower aftermarket
sales. Sales from turbine engines were higher due to increased sales
of engines for the Improved Tactical Air-Launched Decoy (ITALD), Harpoon
and Joint Air-to-Surface Standoff Missile (JASSM) programs. Segment
operating profit was favorably impacted by higher sales, partially offset
by higher warranty expense and higher LIFO reserves. Segment operating
profit also included pension expense, under SFAS No. 87 of $0.3 million
in the second quarter of 2005, compared with $0.4 million for the second
quarter of 2004.
Energy Systems
The Energy Systems
segment's second quarter 2005 sales were $7.6 million, compared with
second quarter 2004 sales of $5.4 million. Second quarter 2005 operating
profit was $0.5 million, compared with $0.2 million for the second quarter
of 2004.
The increase in
second quarter 2005 sales resulted from the timing of multi-year government
contracts which were awarded in 2003 for fuel cell and thermoelectric
power generator work and an increase in commercial hydrogen generator
sales. Segment operating profit was favorably impacted by higher sales.
Segment operating profit also included pension expense, under SFAS No.
87 of $0.1 million in the second quarter of 2005, compared with no pension
expense for the second quarter of 2004. Pension expense allocated to
contracts pursuant to CAS was $0.1 million in the second quarter of
2005, compared with no allocation in the second quarter of 2004.
Additional
Financial Information
Cash Flow
Cash provided by
operating activities was $29.7 million for the second quarter 2005,
compared with $18.4 million for the second quarter of 2004. The higher
cash provided by operating activities in 2005, compared with 2004, was
primarily due to higher net income and reduced working capital requirements,
partially offset by higher pension contributions. Free cash flow (cash
from operating activities less capital expenditures) was $25.6 million
for the second quarter of 2005, compared with free cash flow of $15.7
million for the same period of 2004. On June 30, 2005, Teledyne Technologies
completed the acquisition of the stock of Cougar Components Corporation
for a purchase price of $26.5 million. The acquisition was funded primarily
from borrowings under the $280.0 million credit facility. At July 3,
2005, total debt was $69.7 million, which includes $65.0 million drawn
on available credit lines, as well as other debt and capital lease obligations.
Cash and cash equivalents were $12.3 million at July 3, 2005. Capital
expenditures for the second quarter of 2005 were $4.1 million, compared
with $2.7 million for the second quarter of 2004. Depreciation and amortization
expense was $6.1 million for the second quarter of 2005 and $5.8 million
for the second quarter of 2004.
Free Cash Flow (a) Second Second
Quarter Quarter
(in millions, brackets indicate use of funds) 2005 2004
================================================= ========= =========
Cash provided by operating activities $ 29.7 $ 18.4
Capital expenditures (4.1) (2.7)
--------- ---------
Free cash flow $ 25.6 $ 15.7
================================================= ========= =========
(a) The company defines free cash flow as cash provided by
operating activities (a measure prescribed by generally accepted
accounting principles) less capital expenditures. Free cash flow
provides supplemental information to assist management and the
investment community in analyzing the company's ability to
generate cash flow.
Pension
Pension expense
for the second quarter of 2005 was $3.1 million, compared with pension
expense of $2.2 million for the same period of 2004 in accordance with
the pension accounting requirements of SFAS No. 87. Pension expense
allocated to contracts pursuant to CAS was $2.3 million in the second
quarter of 2005, compared with no allocation in the second quarter of
2004. Under one of its spin-off agreements, after November 29, 2004,
the company is able to charge pension costs to the U.S. Government under
certain government contracts. Pension expense determined under CAS can
generally be recovered through the pricing of products and services
to the U.S. Government.
Income Taxes
The effective tax
rate for the second quarter of 2005 was 37.7% compared with an effective
tax rate of 39.6% for the second quarter of 2004.
Other
Corporate expense
for the second quarter of 2005, compared with the second quarter of
2004, was impacted by higher compensation expense and greater professional
fee expenses which include increased costs related to Sarbanes-Oxley
Act Section 404 compliance and auditing efforts. Interest expense, net
of interest income, was $0.9 million in the second quarter of 2005,
compared with $0.3 million for the second quarter of 2004 and reflected
higher average outstanding debt levels.
Outlook
Based on its current
outlook, the company's management believes that third quarter 2005 earnings
per share will be in the range of approximately $0.36 to $0.38. The
full year 2005 earnings per share outlook is expected to be in the range
of approximately $1.67 to $1.71. The company's estimated effective income
tax rate for 2005 is 37.6%.
The company's 2005
outlook reflects anticipated sales growth in defense electronics and
instrumentation businesses, primarily due to the full-year effect of
the company's 2004 acquisitions. The company's management also expects
revenue in its Systems Engineering segment to have peaked in the first
quarter of 2005, due in part to favorable timing on certain chemical
weapons demilitarization programs and the company's systems engineering
and technical assistance contract with the U.S. Army. In addition, revenues
in the company's Energy Systems segment and its military turbine engine
business are expected to be lower in the second half of 2005 compared
with the second half of 2004.
The full year 2005
earnings outlook includes approximately $12.7 million ($0.23 per share)
in pension expense under SFAS No. 87, or $3.4 million ($0.06 per share)
in net pension expense after recovery of allowable pension costs from
our CAS covered government contracts. Full year 2004 earnings included
$8.7 million ($0.16 per share) in pension expense under SFAS No. 87,
or $8.2 million ($0.15 per share) in net pension expense after recovery
of allowable pension costs from our CAS covered government contracts.
The decrease in pension expense reflects, in part, the ability to recover
pension cost from the government in 2005, partially offset by increased
pension liability due to a reduction in the discount rate assumption
for the company's defined benefit plan. The company's assumed discount
rate is 6.25% in 2005, compared with 6.5% in 2004.
In December 2004,
the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS") No. 123R, "Share
Based Payment" ("SFAS No. 123R") that will require compensation
costs related to share-based payment transactions to be recognized in
the financial statements. SFAS No. 123R must be adopted in the first
quarter of 2006, however, early adoption is allowed. If the company
had elected to adopt SFAS No. 123R in the third quarter of 2005, stock
option expense was expected to have reduced pretax earnings by $2.6
million ($0.05 per share) in the second half of 2005. The company currently
plans to adopt SFAS No. 123R in the first quarter of 2006. As a result,
the current 2005 earnings per share outlook has been revised to exclude
$0.05 per share in stock option expense.
EARNINGS PER SHARE SUMMARY (a)
(Diluted earnings per common share from continuing operations)
2005 Full Year 2004 2003
Outlook Results Results
----------------- ------- --------
Low High Actual Actual
================================ ======== ======== ======= ========
Earnings per share (excluding
net pension expense and income
tax benefit) $ 1.73 $ 1.77 $ 1.39 $ 0.97
Pension expense - SFAS No. 87 (0.23) (0.23) (0.16) (0.13)
Pension expense - CAS 0.17 0.17 0.01 --
------- ------- ------- --------
Earnings per share (excluding
income tax benefit) 1.67 1.71 1.24 0.84
Income tax benefit -- -- -- 0.07
------- ------- ------- --------
Earnings per share - GAAP $ 1.67 $ 1.71 $ 1.24 $ 0.91
================================ ======= ======= ======= ========
(a) The company believes that this supplemental non-GAAP information
is useful to assist management and the investment community in
analyzing the financial results and trends of ongoing operations.
The table facilitates comparisons with prior periods and reflects
a measurement management uses to analyze financial performance.
Forward-Looking
Statements Cautionary Notice
This press release
contains forward-looking statements, as defined in the Private Securities
Litigation Reform Act of 1995, relating to earnings, growth opportunities,
pension matters and strategic plans. All statements made in this press
release that are not historical in nature should be considered forward-looking.
Actual results could differ materially from these forward-looking statements.
Many factors, including changes in demand for products sold to the semiconductor,
communications, commercial aviation and energy exploration markets,
funding, continuation and award of government programs, changes in insurance
expense, customers' acceptance of piston engine price increases, continued
liquidity of our customers (including commercial airline customers)
and economic and political conditions, could change the anticipated
results. In addition, financial market fluctuations affect the value
of the company's pension assets.
Global responses
to terrorism and other perceived threats increase uncertainties associated
with forward-looking statements about our businesses. Various responses
to terrorism and perceived threats could realign government programs,
and affect the composition, funding or timing of our programs. Flight
restrictions would negatively impact the market for general aviation
aircraft piston engines and components.
The company continues
to take action to assure compliance with the internal controls, disclosure
controls and other requirements of the Sarbanes-Oxley Act of 2002. While
the company believes its control systems are effective, there are inherent
limitations in all control systems, and misstatements due to error or
fraud may occur and not be detected.
While Teledyne
Technologies' growth strategy includes possible acquisitions, the company
cannot provide any assurance as to when, if or on what terms any acquisitions
will be made. Acquisitions, including our recent acquisitions involve
various inherent risks, such as, among others, our ability to integrate
acquired businesses and to achieve identified financial and operating
synergies.
Additional information
concerning factors that could cause actual results to differ materially
from those projected in the forward-looking statements is contained
in Teledyne Technologies' periodic filings with the Securities and Exchange
Commission, including its 2004 Annual Report on Form 10-K and Form 10-Q.
The company assumes no duty to update forward-looking statements.
A live webcast
of Teledyne Technologies' second quarter earnings conference call will
be held at 11:00 a.m. (Eastern) on Thursday, July 28, 2005. To access
the call, go to www.companyboardroom.com
or www.teledyne.com approximately ten minutes before the scheduled start
time. A replay will also be available for one month at these same sites
starting at 12:00 p.m. (Eastern) on Thursday, July 28, 2005.
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JULY 3, 2005 AND JUNE 27, 2004
(Unaudited - In millions, except per share amounts)
Second Second Six Six
Quarter Quarter Months Months
2005 2004 2005 2004
============================= ========= ========= ========= =========
Net sales $ 303.3 $ 238.9 $ 600.8 $ 458.5
Costs and expenses:
Costs of sales 220.0 178.3 434.5 346.6
Selling, general and
administrative expenses 56.6 43.9 116.0 85.6
--------- --------- --------- ---------
Total costs and
expenses 276.6 222.2 550.5 432.2
--------- --------- --------- ---------
Income before other income
and (expense) and taxes 26.7 16.7 50.3 26.3
Other income
(expense)(a) -- 0.1 2.5 0.3
Interest expense, net (0.9 ) (0.3 ) (1.7 ) (0.4 )
--------- --------- --------- ---------
Income before income taxes 25.8 16.5 51.1 26.2
Provision for income
taxes 9.7 6.6 19.2 10.4
--------- --------- --------- ---------
Net income $ 16.1 $ 9.9 $ 31.9 $ 15.8
========= ========= ========= =========
Diluted earnings per
common share $ 0.47 $ 0.30 $ 0.93 $ 0.48
========= ========= ========= =========
Weighted average diluted
common shares
outstanding 34.5 33.2 34.5 33.2
============================= ========= ========= ========= =========
(a) The first six months of 2005 includes the first quarter receipt of
$2.5 million pursuant to an agreement with Honda Motor Co., Ltd.
related to the piston engine business.
TELEDYNE TECHNOLOGIES INCORPORATED
SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT
FOR THE THREE AND SIX MONTHS ENDED JULY 3, 2005 AND JUNE 27, 2004
(Unaudited - In millions)
Second Second Six Six
Quarter Quarter Months Months
2005 2004 2005 2004
============================= ========= ======== ========== =========
Net sales:
Electronics and
Communications $ 176.5 $ 134.6 $ 350.0 $ 251.0
Systems Engineering
Solutions 66.2 57.6 136.7 112.2
Aerospace Engines and
Components 53.0 41.3 99.4 84.2
Energy Systems 7.6 5.4 14.7 11.1
--------- -------- ---------- ---------
Total net sales $ 303.3 $ 238.9 $ 600.8 $ 458.5
========= ======== ========== =========
Operating profit (loss) and
other segment income:
Electronics and
Communications $ 20.8 $ 14.2 $ 40.9 $ 22.2
Systems Engineering
Solutions 7.0 7.1 14.5 13.2
Aerospace Engines and
Components(a) 3.4 (0.9) 6.7 (1.6)
Energy Systems 0.5 0.2 1.0 0.5
--------- -------- ---------- ---------
Segment operating profit $ 31.7 $ 20.6 $ 63.1 $ 34.3
Corporate expense (5.0) (3.9) (10.3) (8.0)
Other income
(expense)(a) -- 0.1 -- 0.3
Interest expense, net (0.9) (0.3) (1.7) (0.4)
--------- -------- ---------- ---------
Income before income taxes 25.8 16.5 51.1 26.2
Provision for income
taxes 9.7 6.6 19.2 10.4
--------- -------- ---------- ---------
Net income $ 16.1 $ 9.9 $ 31.9 $ 15.8
============================= ========= ======== ========== =========
(a) The first six months of 2005 includes the first quarter receipt of
$2.5 million pursuant to an agreement with Honda Motor Co., Ltd.
related to the piston engine business. This amount is included as
part of other income on the income statement table above.
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
JULY 3, 2005 AND JANUARY 2, 2005
(Current period unaudited - In millions)
July 3, January 2,
2005 2005(a)
================================================= ========= =========
ASSETS
Cash and cash equivalents $ 12.3 $ 11.4
Accounts receivable, net 165.0 141.7
Inventories, net 108.9 97.7
Deferred income taxes, net 29.7 26.8
Prepaid expenses and other assets 9.3 9.3
--------- ---------
Total current assets 325.2 286.9
Property, plant and equipment, net 95.9 93.3
Deferred income taxes, net 28.7 28.3
Goodwill and acquired intangible assets, net 199.9 190.6
Other assets, net 27.0 25.7
--------- ---------
Total assets $ 676.7 $ 624.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 64.6 $ 62.3
Accrued liabilities 94.2 97.0
Current portion of long-term debt and capital
leases 1.0 3.2
--------- ---------
Total current liabilities 159.8 162.5
Long-term debt and capital lease obligation 68.7 74.4
Other long-term liabilities 146.2 125.8
--------- ---------
Total liabilities 374.7 362.7
Total stockholders' equity 302.0 262.1
--------- ---------
Total liabilities and stockholders' equity $ 676.7 $ 624.8
================================================= ========= =========
(a) Certain amounts for the prior year-end have been changed to
conform to the 2005 presentation.
###
Home
Investors
